Tesla Tags Taxpayers for $4.9 Billion

Volkswagen grabbed headlines with its diesel fakery but the German auto giant is not the only car company that deserves attention these days. As Breitbart notes, Tesla Motors “issued a voluntary worldwide recall to inspect every one of the 90,000 Model S cars the company has ever built.” This is the vehicle that, as we noted, Tesla boss Elon Musk got a U.S. federal government loan of $465 million to produce. The cars cost more than $70,000, fell short of advertising claims, and tended to catch fire. The problem now centers on seat belts, warped brake rotors, leaking battery cooling pumps, wheel alignment and other issues. But the problems are not just mechanical.

As Jerry Hirsch explains in the Los Angeles Times, Elon Musk has built his companies “with the help of billions in government subsidies. Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support.” As Mark Spiegel of Stanphyl Capital Partners told Hirsch, “Government support is a theme of all three of these companies, and without it none of them would be around.” As Hirsch notes, “Nevada is giving Tesla $1.3 billion in incentives to help build a massive battery factory near Reno” and Texas will pony up $20 million for a SpaceX launch facility.

Massive subsidies are not the only issue. As Hirsch observes, “Tesla buyers also get a $7,500 federal income tax credit and a $2,500 rebate from the state of California” and all told, “Tesla buyers have qualified for an estimated $284 million in federal tax incentives and collected more than $38 million in California rebates.” The average household income of Tesla owners, writes Hirsch, is “about $320,000.” So on both ends, the wealthy benefit, and CEO Musk is doing well. In 2013 he plunked down $17 million for a 20,248-square-foot Bel-Air mansion with a gym, seven bedrooms, 10 bathrooms, tennis court, motor court, and a swimming pool.

Volkswagen, meanwhile, will have to pay heavy fines and recall vehicles for an emissions fix. But Volkswagen did not get massive U.S. government subsidies to produce its so-called “clean diesel” vehicles.

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